Category Archives: Plan Design

Exploring the “What if” Scenarios of Health Savings Accounts

Health savings accounts (HSAs) are a great way to save money and efficiently pay for medical expenses. HSAs are tax-advantaged savings accounts that accompany high deductible health plans (HDHPs).

While HSAs are a helpful approach to paying for medical care, the fact that they combine both insurance and tax regulations make them a unique type of benefit with a fairly involved set of requirements. There can be confusion over how HSAs are administered, especially concerning unusual scenarios. The following questions address situations that HSA owners may find themselves in, but are not a typical part of standard HSA information.

What if I want to deposit the maximum annual contribution at once?

This is allowable. While HSAs are typically deducted from your paycheck and deposited every pay period, you may opt for a one-time payment provided that:

Your contribution does not exceed the HSA limit when added to an employer contribution. HSA limits apply to the overall account contribution, and not to each person or entity depositing money into the account. For this reason, you may need to calculate the yearly employer contribution before determining your personal maximum contribution.

You are eligible to contribute to an HSA for the entire year. If you obtained HSA eligibility after Jan. 1, your maximum contribution limit decreases by one-twelfth for every month you are not eligible. You can only make a contribution for the months you’re eligible. There is an exception to this rule for individuals who are eligible to contribute to an HSA on Dec. 1 of a calendar year. They are allowed to contribute an amount equal to the annual HSA contribution amount provided they remained covered by the HSA for at least a 12-month period after contributing.

What if my spouse or family member wants to make contributions to my HSA?

Family members may make contributions on behalf of other family members, provided:

The total contribution put forth by you, your family member and your employer does not exceed the annual contribution limit (with only a single exception for the additional catch-up contribution if the account holder is at least 55 years old).

What if I want to use an HSA to pay for my dependent’s medical care?

This is generally allowable, as qualified medical expenses include unreimbursed medical expenses of the owner, his or her spouse or dependents.

What if I use my HSA for a nonqualified medical expense?

Nonqualified withdrawals from your HSA are considered taxable income. The money you spend would be added to your gross income and taxed, and would also be subject to a 20 percent penalty. An exception to this rule is if you are age 65 or older, you are totally and permanently disabled, or you make the withdrawal after you die.

What if I want to use my HSA to pay my premiums?

This would not be considered a qualified medical expense and would be subject to taxes and penalties.

What if I want to use my HSA to pay for long-term care insurance?

This is allowable. HSA distributions used to pay for long-term care insurance premiums qualify as tax-free, penalty-free distributions. However, there is an annual limit to the amount you may contribute toward this expense, which is adjusted by the IRS every year.

What if I want to close my account?

Unless any of the previous exceptions have been met, the funds remaining in the account would be subject to taxes and penalties if withdrawn for reasons other than a qualified medical expense.

What if I want to invest the funds in my HSA?

You can invest the funds in bank accounts, money markets, mutual funds and stocks, if that is something your HSA servicer allows. Any earnings made on the investments would not count toward your annual contribution limit. You may not invest in collectibles, art, automobiles or real estate.

What if I leave my employer?

Your HSA belongs to you regardless of your employment. If you change jobs, or stop working altogether, you can keep your total HSA balance, including all employer contributions. You can continue spending the account balance on qualified medical expenses free of taxes or penalties.

However, you will not be able to make further contributions to your account, unless you remain enrolled in a HDHP. If you lose your HDHP, all contributions to an HSA must be suspended until you are back on an HSA-compliant HDHP plan.

What if I change my health coverage to a plan that doesn’t allow an HSA?

You will have to stop making contributions to your HSA, but you will be free to spend the account balance with the same tax-free benefits, provided they go toward qualified medical expenses. You could also hold on to the balance and any investments until age 65, at which point the money would be available to you with no taxes or penalties.

 

For more information on these or other HSA scenarios, contact CIBC of Illinois, Inc. today.

Employee Benefits Update from CIBC of Illinois, Inc.

Agencies Plan to Issue Final Rules for SBC Requirements

On March 31, 2015, the Departments of Labor (DOL), Health and Human Services (HHS) and the Treasury (Departments) issued Frequently Asked Questions (FAQ) announcing their intention to issue final regulations for the Affordable Care Act’s (ACA) summary of benefits and coverage (SBC) and uniform glossary requirement. These regulations will finalize the proposed regulations from Dec. 22, 2014.

The ACA requires these disclosure tools—the SBC and uniform glossary—to help consumers compare available coverage options. The requirement to provide them applies to both grandfathered and non-grandfathered plans.

Health plan issuers must provide the SBC to applicants and enrollees free of charge. The SBC is a concise document that provides simple and consistent information about health plan benefits and coverage.

The final regulations are expected to be released in the near future and will apply for plan years beginning on or after Jan. 1, 2016 (including open enrollment periods in fall of 2015 for coverage beginning on or after Jan. 1, 2016).

The updated template and related documents, including sample language and instructions, for the SBC and uniform glossary will not be issued until January 2016. The updated template will then apply for plan years beginning on or after Jan. 1, 2017. Until further guidance is issued, the previously updated template provided on the DOL’s website on April 23, 2014, continues to be authorized.

The March 31 FAQ guidance leaves a lot of uncertainty for employers in regard to their SBC documents. The changes included in the final regulations may require health plans to update their SBC documents before the new template is released.

The forthcoming final regulations may address this issue. In some cases, the Departments have provided temporary enforcement safe harbors when guidance is not issued sufficiently in advance of an effective date. However, at this time, no safe harbors or other relief has been provided on this issue.

Plan Offerings Now Diverging by Group Size

A new trend of health plan offerings has emerged over the past few years. Group size appears to be a determining factor in whether employers are offering more generous health plans or working on implementing more cost-sharing strategies for health benefits.

Large organizations—with more than 500 lives—tend to offer generous health plans, likely in an effort to use their benefits packages as recruiting and retention tools in a market that is becoming increasingly fierce.

Smaller groups are cutting back on benefits and using cost-sharing efforts with employees. This trend of leaner benefits with smaller groups is likely an effort to bring down expenses associated with rising health care costs and other costs related to the ACA.

For more information on how your benefits offerings compare to other employers, contact CIBC of Illinois, Inc. for benchmarking information.

DID YOU KNOW?

On May 4, 2015, the Internal Revenue Service (IRS) released Revenue Procedure 2015-30 to announce the inflation-adjusted limits for health savings accounts (HSAs) for calendar year 2016.

The following limits apply for 2016:

  • The HSA contribution limit is $3,350 for self-only and $6,750 for family.
  • The minimum deductible for high deductible health plans (HDHPs) is $1,300 for self-only and $2,600 for family.
  • The maximum out-of-pocket for HDHPs is $6,550 for self-only and $13,100 for family.

ACA Update: IRS Releases HSA Limits for 2016

On May 4, 2015, the Internal Revenue Service (IRS) released Revenue Procedure 2015-30 to announce the inflation-adjusted limits for health savings accounts (HSAs) for calendar year 2016. The IRS announced the following limits for 2016:

  • The maximum HSA contribution limit;
  • The minimum deductible amount for high deductible health plans (HDHPs); and
  • The maximum out-of-pocket expense limit for HDHPs.

These limits vary based on whether an individual has self-only or family coverage under an HDHP.

Only some of the HSA limits will increase for 2016. The limits that will increase are the HSA contribution limit for individuals with family HDHP coverage and the maximum out-of-pocket expense limit for self-only and family HDHP coverage.

Type of Limit 2015 2016 Change
HSA   Contribution Limit Self-only $3,350 $3,350 No change
Family $6,650 $6,750 Up $100
HSA   Catch-up Contributions (not subject to adjustment for inflation) Age 55 or older $1,000 $1,000 No change
HDHP Minimum Deductible Self-only $1,300 $1,300 No change
Family $2,600 $2,600 No change
HDHP Maximum Out-of-pocket Expense Limit (deductibles, copayments and other amounts, but not premiums) Self-only $6,450 $6,550 Up $100
Family $12,900 $13,100 Up $200

Just let us know if you have any other questions about this, or any other aspect of the Affordable Care Act.

http://www.CIBCINC.com / 1-866-936-3580

ACA Update: Summary of Benefits and Coverage and Uniform Glossary Details Remain Fuzzy, FAQ Released

The Affordable Care Act (ACA) created new disclosure tools—the summary of benefits and coverage (SBC) and uniform glossary—to help consumers compare coverage options available to them. Generally, group health plans and health insurance issuers are required to provide the SBC and uniform glossary free of charge. This disclosure requirement applies to both grandfathered and non-grandfathered plans.

On March 31, 2015, the Departments of Labor (DOL), Health and Human Services (HHS) and the Treasury (Departments) issued a Frequently Asked Question (FAQ) announcing their intention to issue final regulations on the SBC requirement in the near future. The final regulations are expected to apply for plan years beginning on or after Jan. 1, 2016 (including open enrollment periods in fall of 2015 for coverage beginning on or after Jan. 1, 2016).

However, according to this FAQ, the new template, instructions and uniform glossary will not be finalized until January 2016, and will apply for plan years beginning on or after Jan. 1, 2017 (including open enrollment periods in fall of 2016 for coverage beginning on or after Jan. 1, 2017).

Overview of the SBC Requirement

The ACA requires health plans and health insurance issuers to provide an SBC to applicants and enrollees, free of charge. The SBC is a concise document that provides simple and consistent information about health plan benefits and coverage.

The SBC requirement became effective for participants and beneficiaries who enroll or re-enroll through an open enrollment period beginning with the first open enrollment period starting on or after Sept. 23, 2012. For participants and beneficiaries who enroll other than through an open enrollment period (such as newly eligible or special enrollees), SBCs were required to be provided beginning with the first plan year starting on or after Sept. 23, 2012.

The DOL has provided a template for the SBC and Uniform Glossary documents along with instructions and sample language for completing the template, available on the DOL’s website. On April 23, 2013, the SBC template was updated for the second year of applicability to incorporate ACA changes that become effective in later years. Until further guidance is issued, these documents continue to be authorized.

On Dec. 22, 2014, the Departments released proposed regulations on the SBC requirement, which would revise the SBC template, instruction guides and uniform glossary. At that time, the Departments expected that the new requirements for the SBC and uniform glossary would apply to coverage that begins on or after Sept. 1, 2015. The draft-updated template, instructions and supplementary materials are available on the DOL’s website under the heading “Templates, Instructions, and Related Materials—Proposed (SBCs On or after 9/15/15).”

The SBC and Uniform Glossary must be provided in a culturally and linguistically appropriate manner. Translated versions of the template and glossary are available through the Centers for Consumer Information and Insurance Oversight (CCIIO) website.

To the extent a plan’s terms do not reasonably correspond to the template and instructions, the template should be completed in a manner that is as consistent with the instructions as reasonably as possible, while still accurately reflecting the plan’s terms. In addition, the DOL notes that ACA implementation will be marked by an emphasis on assisting (rather than imposing penalties on) plans and issuers that are working diligently and in good faith to understand and comply with the new law.

Thus, during the first and second years of applicability, penalties will not be imposed on plans and issuers that are working diligently and in good faith to comply with the new requirements. This enforcement relief will continue to apply until further guidance is issued.

Overview of the FAQ Guidance

In the FAQ issued on March 31, 2015, the Departments stated that they intend to issue final regulations in the near future. These regulations would finalize proposed changes in the proposed regulations from Dec. 22, 2014, which were proposed to apply beginning Sept. 1, 2015.

However, the FAQ notes that the final rules are expected to apply in connection with:

  • Coverage that would renew or begin on the first day of the first plan year (or policy year, in the individual market) that begins on or after Jan. 1, 2016; or
  • Open enrollment periods that occur in the fall of 2015 for coverage beginning on or after Jan. 1, 2016.

Despite this effective date, the new template, instructions and uniform glossary are not expected to be finalized until January 2016. According to the Departments, this delay is necessary to allow for consumer testing and offer an opportunity for the public to provide further input before finalizing revisions to the SBC template and associated documents.

The revised template and associated documents will apply to:

  • Coverage that would renew or begin on the first day of the first plan year (or policy year, in the individual market) that begins on or after Jan. 1, 2017; or
  • Open enrollment periods that occur in the fall of 2016 for coverage beginning on or after Jan. 1, 2017.

Impact on Employers

This FAQ guidance leaves a lot of uncertainty for employers with regard to their SBC documents. The changes included in the final regulations may require health plans to update their SBC documents before the new template is released.

The forthcoming final regulations may address this issue. In some cases, the Departments have provided temporary enforcement safe harbors when guidance is not issued sufficiently in advance of an effective date. However, at this time, no safe harbors or other relief has been provided on this issue.

For clarification of this information, or to be kept up to date with any and all parts of the Affordable Care Act, contact CIBC today.

Q1 2015 Benefits Bulletin: A Look Back, and Ahead

From CIBC of Illinois

IRS Invites Comments on Cadillac Tax Implementation

On Feb. 23, 2015, the Internal Revenue Service (IRS) issued Notice 2015-16 to describe potential approaches for a number of issues related to the Affordable Care Act’s (ACA) so-called Cadillac tax. The IRS is seeking comments as it begins developing guidance for the implementation of the Cadillac tax. Public comments may be submitted to the IRS until May 15, 2015.

Proposed or final regulations have not yet been issued on the ACA’s Cadillac tax provision. This notice is intended to invite comment as guidelines are assembled, and taxpayers should not rely on the information provided in Notice 2015-16.

Cadillac Tax Overview

The Cadillac tax will go into effect beginning in 2018. This provision imposes a 40 percent excise tax on high-cost group health coverage. The Cadillac tax is intended to encourage companies to choose lower-cost health plans for their employees.

The Cadillac tax provision is found in Internal Revenue Code Section 4980I. This provision taxes the amount of an employee’s “excess benefit.” The excess benefit is the amount by which the monthly cost of an employee’s employer-sponsored health coverage exceeds the annual limitation.

For 2018, the statutory dollar limits are:

  • $10,200 per employee for self-only coverage; and
  • $27,500 per employee for other-than-self-only coverage.

The tax amount for each employee’s coverage will be calculated by the employer and paid by the coverage provider.

The Cadillac tax applies to “applicable employer-sponsored coverage” (both insured and self-insured). Applicable employer-sponsored coverage is coverage under any group health plan made available to the employee by the employer, which is excludable from the employee’s gross income under Code Section 106.

Applicable coverage also includes health flexible spending accounts (FSAs), health savings accounts (HSAs), on-site medical clinics, retiree coverage, multiemployer plans and coverage only for a specified disease or illness and hospital indemnity or other fixed indemnity insurance (if paid on a pretax basis or if a Section 162(l) deduction is allowed).

 

DOL Issues Final Rule to Expand FMLA Protections for Same-sex Spouses

The Department of Labor (DOL) has issued a final rule that will expand rights under the Family and Medical Leave Act (FMLA) for same-sex spouses. Under the final rule, eligible employees in legal same-sex marriages will be able to take FMLA leave in order to care for their spouses or family members, regardless of where they live.

The DOL’s new guidance is effective March 27, 2015, and it replaces guidance regarding FMLA protections for same-sex spouses that was issued following the U.S. Supreme Court’s decision in United States v. Windsor.

The final rule changes the definition of “spouse” under the FMLA as follows:

Adopts a “place of celebration” rule (which is based on where the marriage was entered into), instead of the “state of residence” rule that applied under prior DOL guidance; and

  • Expressly includes same-sex marriages in addition to common law marriages, and encompasses same-sex marriages entered into abroad that could have been entered into in at least one state.

This change will impact FMLA leave in several ways. Specifically, the definitional change means that eligible employees, regardless of where they live, will be able to:

  • Take FMLA leave to care for their same-sex spouses with serious health conditions;
  • Take qualifying exigency leave due to their same-sex spouses’ covered military service; or
  • Take military caregiver leave for their same-sex spouses.

In connection with the final rule, the DOL also issued a set of frequently asked questions (FAQs) to help employers and employees understand the changes to the FMLA’s definition of “spouse.”

To comply with the final rule, employers should review and update their FMLA policies and procedures as necessary. Employers should also train employees who are involved in the leave management process on the expanded eligibility rules for same-sex spouses under the FMLA.

DOJ to Allow Claims Based on Gender Identity Discrimination

On Dec. 18, 2014, the U.S. Department of Justice (DOJ) announced a reversal of its position regarding whether discrimination based on sex incudes discrimination based on an individual’s gender identity and transgender status.

The DOJ has now taken the position that discrimination based on sex includes discrimination based on an individual’s gender identity and transgender status.

Although the DOJ’s authority to file discrimination lawsuits is limited to government employers, this announcement solidifies the federal government’s position on gender identity rights.

Background Title VII of the Civil Rights Act prohibits employers from discriminating on the basis of race, color, religion, sex or national origin when making employment decisions. In 2006, the DOJ took the position that discrimination based on sex excluded discrimination based on an individual’s gender identity or transgender status. The DOJ has now reversed this position.

Gender identity is an individual’s internal sense of being male or female. An individual’s internal identification may or may not correspond to the individual’s biological gender. Transgender individuals are people with a gender identity that is different from the sex assigned to them at birth.

Effect on Employers Employers can expect to see more individuals file claims based on gender identity discrimination and increased federal support for employee protections against discrimination based on gender identity and sexual orientation.

Employers should review their employment policies to ensure that they are compliant with federal, state and local anti-discrimination regulations.

New Guidance and Relief for Employer Payment of Individual Premiums

Under the ACA, employer payment plans do not comply with several provisions that took effect beginning in 2014. Violations of these rules can result in excise taxes of $100 per day for each employee.

An employer payment plan is an arrangement where an employer reimburses or pays premiums for an employee’s individual health insurance.

New Guidance on Employer Payments
The Departments of Labor (DOL), Health and Human Services (HHS) and the Treasury have released several pieces of guidance clarifying the rules regarding these arrangements. The IRS issued Notice 2015-17 on Feb. 18, 2015, providing further clarification.

Specifically, this notice provides information on several related issues:

  • Reiterates that employer payment plans are group health plans that will fail to comply with the ACA’s market reforms applicable to group health plans;
  • Clarifies that increases in employee compensation do not constitute an employer payment plan, as long as the increases are not conditioned on the purchase of individual health coverage;
  • Provides transition relief from the excise tax for employer payment plans sponsored by small employers (those not subject to the ACA’s employer shared responsibility rules) and to S corporation health care arrangements for 2-percent shareholder-employees;
  • Addresses whether employers may reimburse employees for Medicare or TRICARE premiums for active employees under the ACA; and
  • States that employer payments for individual premiums can be excludable from an employee’s income under the tax code but will still violate the ACA’s market reforms.

Employers should review their benefit and compensation plans and policies to ensure they are not in violation of current guidance regarding employer payment plans.

The information contained in this newsletter is not intended as legal or medical advice. Please consult a professional for more information.

HR Brief from CIBC of Illinois-March 2015

HR Brief Newsletter April 2015

IRS Solicits Comments on Affordable Care Act Cadillac Tax Implementation for 2018

For taxable years beginning in 2018, the Affordable Care Act (ACA) imposes a 40 percent excise tax on high-cost group health coverage. This tax, also known as the “Cadillac tax,” is intended to encourage companies to choose lower-cost health plans for their employees.

On Feb. 23, 2015, the Internal Revenue Service (IRS) issued Notice 2015-16 to begin the process of developing guidance to implement the Cadillac tax. Proposed or final regulations have not yet been issued on the ACA’s Cadillac tax provision.

This notice describes potential approaches with regard to a number of issues under the Cadillac tax and invites comments on these approaches. Public comments may be submitted to the IRS until May 15, 2015.

Taxpayers may not rely on the information provided in Notice 2015-16. However, the IRS notes that these potential approaches could be incorporated in future proposed regulations.

Overview of the Cadillac Tax

The Cadillac tax provision is found in Internal Revenue Code (Code) Section 4980I. This provision taxes the amount of an employee’s “excess benefit.” The excess benefit is the amount by which the monthly cost of an employee’s employer-sponsored health coverage exceeds the annual limitation.

For 2018, the statutory dollar limits are:

  • $10,200 per employee for self-only coverage; and
  • $27,500 per employee for other-than-self-only coverage.

The cost of applicable coverage for purposes of the Cadillac tax is determined under rules similar to those used for determining the COBRA applicable premium. The tax amount for each employee’s coverage will be calculated by the employer and paid by the coverage provider.

Applicable Employer-sponsored Coverage

The Cadillac tax applies to “applicable employer-sponsored coverage” (both insured and self-insured). Applicable employer-sponsored coverage is coverage under any group health plan made available to the employee by the employer, which is excludable from the employee’s gross income under Code Section 106. The term “employee” includes any former employee, surviving spouse or other primary insured individual.

Applicable coverage also includes health FSAs, HSAs, on-site medical clinics, retiree coverage, multiemployer plans and coverage only for a specified disease or illness and hospital indemnity or other fixed indemnity insurance (if paid on a pre-tax basis or a Section 162(l) deduction is allowed).

Some types of coverage are generally excluded from applicable coverage, including coverage under which medical benefits are secondary or incidental to other insurance benefits, long-term care coverage, limited scope dental and vision coverage and coverage only for a specified disease or illness and hospital indemnity or other fixed indemnity insurance (if paid for exclusively with after-tax dollars or a Section 162(l) deduction is not allowed).

Overview of IRS Proposals

Notice 2015-16 describes a number of potential approaches on certain aspects of the ACA’s Cadillac tax provision, which may be included in future proposed regulations. The IRS is requesting comments on the potential approaches, as well as any other approaches or guidance that might be helpful.

Definition of Applicable Coverage

Notice 2015-16 includes the following potential clarifications on the definition of applicable coverage:

  • The IRS expects future guidance to include executive physical programs and HRAs as applicable coverage.
  • The IRS anticipates that future regulations will exclude on-site medical clinics that offer only de minimis medical care to employees from the definition of applicable coverage.
  • The IRS invites comments on how to treat on-site medical clinics that provide certain services in addition to (or in lieu of) first aid.
  • The IRS is considering whether to propose approaches under which self-insured limited scope dental and vision coverage and certain employee assistance programs (EAPs) that qualify as an excepted benefit under the amended excepted benefits regulations would be excluded from applicable coverage for purposes of the Cadillac tax. Comments are requested on any reasons why the IRS should not implement these approaches.

Determining the Cost of Applicable Coverage

A number of issues arise in calculating the COBRA applicable premium, including how to determine which non-COBRA beneficiaries are similarly situated, methods for self-insured plans to determine the applicable premium and how to determine the applicable premium for HRAs.

Notice 2015-16 describes potential approaches for each of these issues for purposes of the Cadillac tax. The IRS is also considering whether these potential approaches should apply for determining the COBRA applicable premium.

  • The COBRA applicable premium is based on the cost of coverage for similarly situated non-COBRA beneficiaries. The IRS anticipates that a somewhat similar standard will apply for the Cadillac tax, where the cost of the applicable coverage for an employee will be based on the average cost of that type of applicable coverage for that employee and all similarly situated employees. The IRS invites comments on this potential approach, including areas where more guidance would be beneficial. Future guidance will likely attempt to harmonize the COBRA rules with the Cadillac tax rules (although some differences may be appropriate).
  • Currently, there are two methods for self-insured plans to calculate the COBRA applicable premium—the actuarial basis method and the past cost method. The IRS anticipates that, in general, these two methods will apply for determining the cost of applicable coverage for self-insured plans for purposes of the Cadillac tax, and it seeks comment on this approach.
  • Instead of determining the cost of applicable coverage using rules similar to the COBRA applicable premium rules, some have suggested that this could be determined by reference to the cost of similar coverage available elsewhere (for example, through an Exchange), whether or not based on actuarial values, metal levels (bronze, silver, etc.) or other metrics. The IRS invites comments on other alternative approaches.

Determination Period

The IRS anticipates that the method for calculating the cost of applicable coverage would be elected prior to the period for which the cost applies, under similar rules as the COBRA applicable premium. The IRS invites comments on whether the COBRA rules should apply for purposes of the Cadillac tax, and whether more guidance would be beneficial.

Applicable Dollar Limit

The IRS is considering an approach to clarify the application of the dollar limit for employees with both self-only and other-than-self-only applicable coverage (for example, self-only major medical coverage and supplemental coverage, such as an HRA, that covers the employee and his or her family).

The IRS invites comments on the following potential approaches, including any potential administrative difficulties, as well as any other approaches that might address this issue:

  • Under one approach, the applicable dollar limit would depend on whether the employee’s primary (major medical) coverage is self-only coverage or other-than-self-only coverage. The employee’s primary coverage would be the type of coverage that accounts for the majority of the aggregate cost of applicable coverage.
  • An alternative approach would apply a composite dollar limit determined by prorating the dollar limits for each employee according to the ratio of the cost of the self-only coverage and the cost of the other-than-self-only coverage provided to the employee.

 

Dollar Limit Adjustments

The annual dollar limits for the Cadillac tax may be adjusted in certain circumstances. For example, a “health cost adjustment percentage” will be applied to determine the dollar limits for 2018, and a cost-of-living adjustment will be applied to determine the dollar limits for taxable years after 2018. In addition, the dollar limits are increased by an age and gender adjustment, if applicable for an employer. Also, higher dollar limits apply for:

  • Qualified retirees; and
  • Employees engaged in a high-risk profession or employed to repair or install electrical or telecommunication lines.

The IRS intends to include rules regarding these adjustments in proposed regulations, and invites comments on the application and adjustment of the dollar limits.

Comment Submissions

The IRS invited comments on the issues addressed in the notice and on any other issues under the Cadillac tax provision. The IRS also intends to issue another notice inviting comments on additional issues. The comments received by the IRS are expected to be used to draft proposed regulations.

Comments should be submitted no later than May 15, 2015, and should reference Notice 2015-16. Comments may be sent electronically to: Notice.comments@irscounsel.treas.gov, or mailed to: CC:PA:LPD:PR (Notice 2015-16), Room 5203, Internal Revenue Service, P.O. Box 7604, Ben Franklin Station, Washington, DC 20044.

Reliance

Taxpayers may not rely upon Notice 2015-16 for guidance regarding the Cadillac tax provision. The IRS also specified that no inference should be drawn from the notice concerning any provision of Section 4980I other than those addressed in the notice or concerning any other section of the ACA or COBRA

CIBC of Illinois, Inc. Merges With Strategic Employee Benefit Services of Champaign

CIBC of Illinois, Inc. Merges With Strategic Employee Benefit Services of Champaign

 

FOR IMMEDIATE RELEASE

Kankakee, IL– (February 9, 2015)- William Johnson, Chairman and CEO of CIBC of Illinois, Inc. is pleased to announce the successful merger of CIBC of Illinois and Strategic Employee Benefit Services of Champaign (SEBS). The new organization will operate as CIBC of Illinois, Inc. and include offices in both Kankakee and Champaign.

“This is an extremely exciting development for both of our organizations,” said Johnson. “The expertise that CIBC possesses in the ever-changing world of employee benefits and group health insurance is exactly what businesses are demanding, and the SEBS connection to the Central and Southern Illinois markets is a great opportunity for us to deliver these solutions on a consistent basis. The synergies we gain via this new powerhouse organization will position CIBC as an industry-leader in both size and capabilities that we deliver to businesses.”

As a result of the merger, former SEBS Benefit Consultant Tony Johnston was named as President and Chief Operating Officer for both the Kankakee and Champaign offices, and Erin Beck remains as Chief Financial Officer for CIBC.

“This is a great opportunity for the SEBS team to further commit to the exciting business opportunity of employee benefits, “said Tony Johnston. “Our extensive client base will now have access to the cutting edge benefits knowledge, wellness resources, technology, and regulatory compliance that is requisite in the healthcare reform era.”

About CIBC of Illinois, Inc.

CIBC is a leader in the development and implementation of innovative employee benefits plans. Headquartered an hour south of Chicago in Kankakee and with a branch office in Champaign, CIBC serves private sector clients, non-profit organizations, governmental bodies and agencies and Taft-Hartley health and welfare funds across the Midwest. Over the past two decades, they have creatively addressed the employee benefits needs of hundreds of organizations — some with as few as two employees and others with as many as 25,000 employees around the globe.

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High Deductible Plan Options: Bringing Consumerism and Cost-Savings to tthe Marketplace

CIBC of Illinois specializes in Group Benefit plans, and in order to best serve our clients, we also employ consultants that specialize in individual and family health insurance plans. In both of these areas, we continually get asked about high deductible plans because, in most cases, there is a significant cost advantage found in these types of plans. Hopefully this article will provide some basic information, and as always, please contact us for a detailed analysis.

Moving From a Standard Plan to an HDHP

There is no such thing as a one-size-fits-all health plan. Everyone has different health insurance needs depending on their health care requirements along with those of their dependents. While some prefer standard deductible health insurance (often called a PPO health insurance plan), people are increasingly switching to a High Deductible Health Plan (HDHP) with a Health Savings Account (HSA) as a better way to maximize their health care dollars.

Standard Plans vs. HDHPs

Standard plans and HDHPs are set up much in the same way. Under both plans, the member pays a premium for coverage. Both must cover preventive services free of charge. If a member receives nonpreventive medical care, he or she pays a deductible—a specified amount of money that the insured must pay before an insurance company will pay a claim. The chief difference between the plans is that under an HDHP, premium payments are considerably lower and the deductible is considerably higher.

The minimum deductibles for HDHPs are established by the IRS. For 2015, the minimum deductible is $1,300 for individuals and $2,600 for families. Comparatively, standard plans come with a deductible that is generally quite a bit lower.

The cost of the higher premiums for HDHP plans is offset by two factors. First, as previously mentioned, the premium price for an HDHP is much lower than standard plans. This means that members who use little or no medical care during the year can save hundreds of dollars that would otherwise go to unnecessary health coverage, while still remaining compliant with the individual mandate provision of the Affordable Care Act (ACA).

While some people prefer standard deductible health insurance, people are increasingly switching to an HDHP with an HSA as a better way to maximize their health care dollars.

The second major factor setting HDHPs apart from standard plans is the addition of an HSA.

Health Savings Accounts

HSAs are one of several types of tax-advantaged health accounts, and are exclusively available to people enrolled in an HSA-compliant HDHP.

With an HSA, the account holder or his or her employer (usually both) make contributions into a savings account. No taxes are deducted from money placed into the account, as the HSA contribution is withdrawn from a paycheck before taxes are assessed. While in the savings account, the money can earn interest. The employee is free to spend that money on qualified medical expenses.

The total amount that can be placed in an HSA per year is capped by the IRS. For 2015, the maximum contribution limit is $3,350 for individuals and $6,650 for families, though account holders over 55 years old may contribute an extra $1,000 to those totals.

These limits are significantly higher than other types of tax-advantaged health accounts, and unlike the other options, HSAs have additional unique features that allow you to save more money and keep it over a longer period of time. Whereas funds in health Flexible Spending Accounts (FSAs) and Health Reimbursements Arrangements (HRAs) come with an expiration date or a maximum carry-over dollar amount, HSAs allow you to build your balance as high as you wish in perpetuity. Except for the cap on total contributions per year, there are no limits on how much money can be in your account and how long it remains open.

Additionally, HSAs are individually owned accounts, meaning employees take the account—including any employer contributions—with them if they leave their employer.

Using Health Care with an HDHP

Because of the high deductibles associated with HDHPs, having an HDHP means you need to become a smart health care shopper.

The most important thing to keep in mind is that some types of health care products and services cost much more than similar items, and the more expensive option may not be necessary for the treatment you require.

Additionally, like most other health plans, HDHPs cover preventive services at no cost. Preventive care is defined as medical checkups and tests, immunizations and counseling services used to prevent chronic illnesses from occurring. Preventive care not only keeps you healthy, but it can also monitor and even reduce the risk of developing future, costly health problems.

Most types of specific preventive services are listed here. While it can sometimes be difficult to determine if a specific medical service qualifies as preventive, you can call your health plan to learn if a service is considered preventive before receiving it.

Other medial savings strategies people with HDHPs should consider are:

  • Using a generic in place of a name brand prescription can result in significant savings. While there is not a generic version for every type of drug, the only difference between a branded drug and a generic counterpart is the name; they both have the same active ingredients. If you need medication, find out what class of drugs your prescription is classified under. If you receive a name brand prescription from a doctor, ask if a generic is available.
  • Emergency Room vs. Urgent Care.Like prescriptions, there is a sizable cost adjustment between emergency rooms and urgent care. It is very expensive for hospitals to support all of the equipment and staff that an emergency room requires, so visits to the emergency room generally cost much more than those to a doctor’s office or an urgent care center. If you develop a problem that needs to be treated quickly, but it is not life threatening or risking disability, go to an urgent care clinic.
  • Qualified Medical Expenses. Use your HSA to pay for qualified medical expenses without paying taxes. Qualified medical expenses include the costs of diagnosis, cure, mitigation, treatment or prevention of disease, and the costs for treatments affecting any part or function of the body. These expenses include payments for medical services rendered by physicians, surgeons, dentists and other medical practitioners. They also include the costs of equipment, supplies and diagnostic devices needed for these purposes. Like preventive care, there can sometimes be uncertainty surrounding what is an allowable qualified medical expense. Specific qualified medical expenses are approved by the IRS, and a list of them can be found here.

HDHPs and HSAs are not the ideal health coverage plan for everyone. However, for many people, HDHPs are a great way to avoid paying for superfluous coverage and HSAs are an excellent vehicle for stockpiling tax-free money to use on future health care needs.

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